“While this is positive news, it doesn’t mean we are out of the woods just yet,” said Marshal Cohen, chief industry analyst for the NPD Group. “The real story is that the tide has not turned entirely.”

Cohen added that an ebb-and-flow pattern will likely occur, with sales improving through February and March and receding in April. Still, this is preferable to a year of declining or flat sales.

Phillip Swagel, an outside economist for the Retail Industry Leaders Association, echoed Cohen’s view. “We are still in the early part of the economic recovery,” he said, “and sustained economic growth is needed to drive a job market rebound” that will give consumers the confidence to spend and drive up sales numbers.

U.S. households clearly are still unsure that the economy is on the mend; according to the University of Michigan’s monthly survey, consumer confidence sentiment slipped to 73.7 in February, down from 74.4 in January.

General merchandise stores jumped ahead of other categories with a 1.2% improvement in monthly sales in January, and electronics and appliance retailers saw a 0.6% sales boost, but that did little for share prices Friday. Discount chain
Wal-Mart
lost 0.3% to $52.90, while rival
Target
fell 1% to $48.66,
Best Buy
managed to gain 0.7% to $35.88 and
RadioShack
slipped 0.3% to $19.87.

The first retail sales report of 2010 was not without its weak spots, most related to the still-struggling housing market. Furniture and home furnishings sales fell 1.4% in January, while building material and garden supplies fell 1.2% from a month earlier. Shares of
Home Depot
were off 0.6% to $28.83 Friday.